A new report released by Senator Finance Committee Ranking Member Ron Wyden (D-Ore.) finds rapid growth in spending on marketing middlemen among Medicare Advantage (MA) plans. Insurers, he said, are employing third-party marketing organizations (TPMOs) to maximize the number of seniors enrolled in their plans.
The 40-page report said that payments for marketing and administrative services have outpaced MA enrollment growth, and that payments for those enrolled in dual-eligible special needs plans (D-SNPs) can be five to 10 times greater than general enrollments.
“Marketing middlemen are exploiting Medicare Advantage rules to aggressively push private MA plans on seniors,” Wyden said in an announcement. “Americans are sick of middlemen driving up costs and delivering a lousy product—it’s time to crack down on these abusive practices that harm seniors and waste taxpayer dollars.”
Wyden has frequently focused on Medicare marketing practices. In 2022, he released a report surveying the use of deceptive mailers, aggressive marketing, and the dramatic uptick in consumer complaints surrounding MA marketing. In 2023, Wyden convened a hearing to examine marketing issues ahead of the MA open enrollment season. In 2024, Wyden opened an inquiry into five TPMOs’ business practices that resulted in the Tuesday’s report.
Among the findings of the latest report:
- Spending on “agents and brokers fees and commissions” by insurance companies investigated by the committee nearly tripled from $2.4 billion to $6.9 billion from 2018 to 2023.
- State and federal regulators have limited oversight of marketing practices, especially with the increased use of TPMOs and other subcontractors.
- The MA marketing boom has encouraged insurance companies and brokers to aggressively enroll seniors into plans that may not cover their preferred doctor or cover key health benefits.
The report said that MA plans rely on marketing activities to drive enrollment and profits but with questionable benefits for seniors and people with disabilities. “Consumers are vulnerable to marketing tactics by a ballooning stream of third-party marketing organizations, lead generators, and data brokers fueled by federal tax dollars that fund MA plans,” it said.
While traditional Medicare doesn’t meaningfully market its services, the report concluded that MA plans “flood the zone” with mailers, online advertisements, and phone calls. Plan marketing affiliates aim to direct eligible beneficiaries toward a private plan. They are sometimes deceptive and sometimes unclear, according to the report.
“By the time a beneficiary speaks with an insurance agent, they may have been steered on the basis of minimal information about their health needs and are dramatically more likely to make an enrollment decision on the basis of their conversation with a broker. A resulting plan enrollment may not meet their health needs, may constrain choice of health care provider, and might impose the added burden of prior authorization and referral requirements,” the report said.
To combat these practices, the report recommends Congress and the Centers for Medicare & Medicaid Services (CMS) take the following actions:
Ban “out-of-whack” marketing and other service fees that influence agents and brokers to recommend certain MA plans and drive up taxpayers cost. Congress should instruct CMS to ban MA plans from paying more to TPMOs or other related entities for any enrollment-related administrative or service for dually eligible beneficiaries or other enrollees.
Prohibit MA plan payments for any technology that limits or hides what MA plans an agent or broker sees when supporting an enrollee. CMS should prohibit MA plans from including suppression lists in their contracts with technology platforms and prohibit MA plans from supporting TPMO administrative services that limit what MA plans a broker may see.
Regulate marketing organizations and lead generators. The current system has created opportunities for some bad actors to take advantage of vulnerable seniors, according to the report. Congress must give CMS the authority to directly regulate marketing organizations and lead generators, and the full amount that is expended on marketing across entities, to ensure that these companies are not using deceptive or high-pressure sales tactics, and MA plans should only be allowed to contract with marketing and lead generation companies approved by CMS.
Require CMS to implement and enforce policies designed to hold brokers, lead generators, and markets and insurers accountable. Companies that systematically violate or ignore CMS requirements should face appropriate penalties including meaningful financial penalties, loss of renewal commissions, loss of licensure, and jail time if appropriate.
Establish a fixed fee for all MA plan enrollments. The fee should be provided for all MA plans enrollments to compensate agents and brokers for their time. CMS should also determine administrative fees to ensure that agents, brokers, and administrators are free from financial influence when presenting plan options to consumers.
Require agents and brokers to act as a fiduciary for MA enrollees. Agents and brokers can serve as trusted advisors to millions of Medicare beneficiaries helping guide seniors and people with disabilities to compare types of Medicare coverage, including Traditional Medicare and available MA plans. Requiring agents and brokers to have fiduciary responsibility means that they must put the consumer’s needs first even though the agent and broker is paid a commission by the insurer.
Ask CMS to standardize the language and definitions used to describe the chain of enrollment. There are currently no uniform definitions of key parties and stages in the stream of enrollment offered by CMS. Most notably, the report said. CMS does not define “TPMO” or “lead generator.” This allows certain parties to operate in a regulatory grey zone, complicating and undermining oversight efforts. To better regulate the activities of MA plans, FMOs and TPMOs, and lead generators, CMS should adopt uniform definitions of these terms in regulation.